LightSquared pays off $56m debt with Brit biz Inmarsat

What could possibly be up mobile broadband wannabe's sleeve?

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Troubled wannabe mobile broadband operator LightSquared has settled with its only significant debtor Inmarsat, although it still lacks any plan to pay back its own investors.

LightSquared has paid off the British satellite business to the tune of $56.25m (£35m). In return, for the next two years Inmarsat won't collect its quarterly radio spectrum rent of $30m and the $29.6m late payment penalty, which should be long enough to establish if LightSquared can salvage a business model from the existing wreckage.

LightSquared had signed a contact to lease some of Inmarsat's US radio frequencies, in which it planned to deploy a national 4G network. LightSquared was forced to rent that space after its own spectrum holdings were ruled too close to the GPS bands for the FCC's comfort. But it turned out that the FCC, or rather the GPS industry, thought the leased bands were also too risky to fill with mobile telephony, so LightSquared was left with a contract for spectrum it couldn't use.

When the company defaulted on the rent there seemed little likelihood of Inmarsat getting its money back - without any spectrum LightSquared has no business model beyond operating its existing satellite in the bands it owns. Making money out of satellite telephony is all but impossible; even Iridium, the poster child for satellite telephony, is dependent on fat military contacts and just about everyone else went bust.

LightSquared is fighting for more spectrum, hoping to embarrass the FCC into forcing the US military into a spectrum swap. That strategy seemed hugely optimistic at best, but it's hard to see why LightSquared would be paying off Inmarsat if it didn't more have a long-term plan of some sort, and we wait with interest to see what that might be. ®